Question

Brendon Co. sells a variety of souvenir products on Emerald Isle, North Carolina. The company began 2009 with inventory having a cost of $136,000 and a retail value of $241,000. During 2009, Brendon purchased a total of $662,200 of goods; upon receipt of the goods, they were marked to sell at retail prices totaling $987,000. The company uses the retail inventory method, and sales for 2009 were $1,040,000.
Required:
(a) What is Brendon’s actual cost of goods available for sale during 2009?
(b) What is the cost-to-retail percentage for 2009?
(c) What is the estimated ending inventory at retail?
(d) What is the estimated ending inventory at cost?
(e) Will the actual ending inventory be equal to the estimates? Why or why not?